Mumbai: In a remarkable surge, net inflows into major mutual fund schemes soared in FY25, with SBI Mutual Fund leading the charge. Posting an impressive ₹38,429 crore in inflows, the fund benefited significantly from increased investments through its parent company, the State Bank of India (SBI). Other notable fund houses, such as ICICI Prudential and HDFC Mutual Fund, also reported significant growth, showcasing the strength and potential of the Indian mutual fund market.
Significant Growth in Mutual Funds
The fiscal year 2024-25 has proven to be a landmark period for India’s mutual fund industry, particularly for large fund houses. A substantial rise in net inflows is chiefly attributed to investments facilitated through sponsor banks. Leading the pack, SBI Mutual Fund reported net inflows of ₹38,429 crore, a staggering increase from ₹17,857 crore the previous fiscal year.
This remarkable uptick, amounting to a 115 percent increase, was significantly propelled by higher investments through its parent company, State Bank of India (SBI), which contributed an impressive 68 percent of the total inflows. Specifically, inflows through SBI jumped from ₹9,253 crore in FY24 to approximately ₹26,027 crore in FY25, underscoring the pivotal role of banks in the mutual fund sector.
Other Major Fund Houses Flourish
While SBI Mutual Fund was a standout performer, other major players also witnessed considerable growth. ICICI Prudential Mutual Fund saw its net inflows double to ₹32,789 crore, indicating a strong rebound after two years of outflows, thanks to the active participation of ICICI Bank, which added ₹5,662 crore to its inflows.
Meanwhile, HDFC Mutual Fund reported a 56 percent increase in net inflows to ₹32,783 crore, fueled by HDFC Bank’s contributions which grew 1.7 times year-on-year, reaching ₹5,034 crore. The influence of sponsor banks on mutual fund inflows cannot be underestimated, as aggregate distributor data from the Association of Mutual Funds in India indicates that clients of major banks like SBI, HDFC Bank, and ICICI Bank collectively held nearly ₹3.5 trillion in mutual funds.
The Dominance of Sponsor Banks
Banks have emerged as the primary distributors of mutual funds in the regular space, largely due to their wide-reaching customer base and geographical reach. According to market expert Sunil Subramaniam, “Sponsor banks are central to MF inflows in India, leading both by total assets and new investor acquisition.” His analysis highlights an industry trend where the largest fund houses, characterized by substantial assets under management and inflows, are predominantly bank-owned.
The reliance on bank infrastructure for customer acquisition is a key factor in the growing dominance of these firms within the mutual fund sector. Sponsor banks possess a wealth of know-your-customer (KYC)-verified, digitally-enabled clients, giving them a competitive edge in expanding their sponsored fund houses.
Positive Trends Across the Board
The positive trends weren’t limited to the largest fund houses; smaller firms like Kotak Mutual Fund and Axis Mutual Fund also showed encouraging results. Kotak Mahindra Bank uniquely routed ₹1,050 crore into Kotak MF, up from a mere ₹40 crore the previous year, marking a notable increase in investor confidence. Conversely, Axis Bank made a significant turnaround, going from a ₹5,186 crore outflow in FY24 to a modest inflow of around ₹343 crore in FY25.
Similarly, the only non-bank representative among the Big Five, Nippon India Mutual Fund, attracted additional investments, thanks in part to NJ India Invest, which funneled ₹2,800 crore into its regular plans—more than double from the previous year. Nippon’s total net inflows stood at ₹20,433 crore, reflecting a growth of 51 percent year-on-year.
The mutual fund landscape in India points towards a bright future, driven largely by the digital advancements and retail penetration enabled by sponsor banks. The combination of robust financial products and a highly engaged customer base augurs well for the continuity of this growth trend.
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Original source: www.livemint.com
